Case Study

Energy efficiency and economic growth in South Africa

As part of the Energy pathways to 2050 project, Vivid Economics used an innovative econometric approach to estimate the benefit to economic growth of an improvement in energy efficiency. This analysis was conducted for South Africa, United States, Canada and Australia. It was found that, in South Africa, energy efficiency could have a reasonable impact on economic growth but this is likely to decline as South Africa develops. The work also investigated how energy use may change in response to energy efficiency. It was found that the energy required to fuel economic growth induced by improvements in efficiency led to a large rebound effect. The implication of this being that energy efficiency can be a tool not for reducing energy demand but for increasing economic growth.